SUPPLY CHAIN

MANGEMENT
IN HOSPITALITY
INDUSTRY
Ralph Angelo I. Claveria
 Supply Chain Management
◦ All activities associated with the flow and transformation of goods from the raw materials stage,
through to end users, as well as the associated information inflows. This includes material and
information flows both up and down supply chain. Therefore supply chain includes a whole horde of
systems such as systems management, operations and assembly, purchasing, production schedule,
order processing, inventory management, transportation, warehousing, and customer service.

◦ Supply chain management is described as one of the most influential developments in business
management and has gained significance for improving organizational competitiveness (Croom et al.
2000; Lambert and Cooper 2000; Giannakis and Croom 2004; Gunasekaran 2004b; Cousin et al.
2006).
Framework of SCM Elements

Business processes are the activities that produce a

specific output of value to the customer.

The management components are the components

by which the business processes are structured and
managed.

The supply chain structure is the configuration of

companies within the supply chain
7 Principles of Supply Chain Management
Adapt Supply Chain to Customer’s Needs
The businesses and supply chain professionals understand customer’s needs. Customers are
divided into different groups called ‘segments’ in order to understand them better. On the basis of
sales volume or profitability, the primitive way to segment customer is ABC analysis. It can also
be done by product, trade channel and industry. Anticipating the customer’s needs is also very
important. Once the needs of the customers are anticipated, the supply chain should be aligned
to cater to the needs.
Customize Logistics Network
After the segmentation of the customers based on different requirements, SCM managers have to
tailor logistics networks to serve different segments. The SCM manager has to prioritize the
deliveries and make suitable provisions to quickly distribute those goods that are marked as
urgent.
Align Demand Planning Across Supply Chain
Supply chain professionals are trained to share data with trading partners in order to avoid the unnecessary
stock. The demand data must be used wisely by the SCM managers.

Differentiate Products Close to Customers

Standardization and differentiation are two completely opposite things. Due to the economy of the sales,
standardization can drastically bring down the cost.

Outsources Strategically
Though outsourcing is all the rage, the managers must outsource strategically. The core expertise should
not be outsourced ever. This principle stands the test of time.

Develop IT that Support Multi-Level Decision Making

The IT projects should not be done in isolation and before IT projects, the business process reengineering
should be done. This provides a proper understanding of process insufficiencies and helps to determine the
kind of innovation needed.
Factors Affecting an Effective Supply Chain Management

◦ Environmental Uncertainty
All environmental issues of a product chain including unexpected changes of customers, suppliers, competitors, and
technologies have an impact on supply chains. The support of the government and uncertain aspects from overseas
also play a vital role in shaping the success of your business. A company environment relates to the company’s
expectations of quality, timely delivery, competition, and the level of rivalry among firms.

◦ Information Technology
Technology today allows all supply chain stakeholders in staying connected in real-time. It reduces lead time,
paperwork, and other unnecessary activities, all of which benefit managers in coordinating, accessing information and
data interchange, improved customer and supplier relationships, and inventory management. Different tools from the IT
also help in executing and managing warehouse data, vendor managed inventory, distribution requirement planning,
and customer relationship management.
◦Supply Chain Relationships
What is an effective supply chain without strategic supplier partnerships and successful customer relationships? After all, that is what
ultimately benefits organizations by coordinating and integrating activities with suppliers and understanding a customer’s needs. All
companies are inclined to work with different suppliers indirectly which is why it is necessary that your relationship with suppliers
satisfy the mutual needs of your company and the suppliers.
◦Manufacturing
In today’s generation, the key factor that implicates the success of products is smart manufacturing. There are two main factors that
add value to your products: flexibility and quality. That’s because complex markets, fierce competition, and fast changes in demand
require you to be ready to react promptly to customers’ needs. At the same time, you’ve got to understand that quality is not a bonus
for the customer but an expectation. High costs, low productivity, and loss of market share have always been directly related to poor
quality. So, think and act wisely.
◦Supply Chain Management Performance
SCM comprises of logistics, supplier markets and performances, and material sourcing, all of which define the operational excellence
of delivering a leading customer experience. While logistics must be focused on the coordination and collaboration of activities,
logistics social responsibility, strategic distribution planning, and technology and information systems, a superior supply chain
management requires significant information with respect to supplier markets and their performance which is usually higher when
supply managers perceive trust and satisfaction.
◦ Business Management
Business Management consists of leading, planning, organizing, monitoring, and controlling all people and
activities in a company to achieve objectives and goals. It caters to fast changes in customer demand,
globalization of markets, and the changing technology to improve competitiveness and to
achieve customer satisfaction. Process strategies, process performances, marketing strategies, and
innovation, all have a role to play in the supply chain of any organization.

◦ Customer Satisfaction
A customer’s perception is not the same as the product manufacturer’s perception. That’s because a
customer gives more value to low cost, timely delivery, and receiving customized products whereas
manufacturers and retailers look for practical after-sales policies that permit them to enhance customer
satisfaction levels. The goal of companies is to give customers the best service in an efficient and effective
manner, without forgetting about information such as product description, product availability, order status,
shipping dates, and assisting them in whatever they need, defined by demand forecasting, service levels,
order processing, parts/service support, and aftermarket operations.
 Benefits of Supply Chain Management
◦ Supplier Identification: Generally supplier base is huge in the hospitality industry, this has its positives,
conscious steps should be taken to identify committed suppliers who are willing to go by the objectives of
the Organization, and be involved and appreciate and support the changes of the organizational
requirements.

◦ Supplier evaluation and selection: Supplier evaluation is a critical process, suppliers ability to supply
the right goods at the right time with correct specifications has to be reviewed. Contracts are awarded
after careful negotiations with the supplier.
 
◦ Supplier management : After the suppliers fulfills its obligation by delivering the required goods as per
specifications it’s the responsibility of the Purchase department to ensure suppliers bills are paid
promptly , at times good suppliers are lost due to the payment delays. Therefore its very essential to
maintain a strong relationship with the supplier hence supplier management has to be strengthened.
References

◦ https://blog.mitsde.com/7-principles-of-supply ◦ https://www.turningcloud.com/blog/factors-aff
-chain-management/ ecting-supply-chain/
◦ https://www.supplychain247.com/article/
7_principles_of_supply_chain_management_e
xplained/veridian